What is Average Adjusting?
Average Adjusting is a highly skilled profession rendering services to shipping and marine insurance community, preparing statement of claims for the Shipowners to enable them to collect the same from their Insurers.
What do you mean by Average Adjusting?
The term "Average" is derived from the Italian and Greek mongrel word "Averia" meaning loss and "Adjusting" here means preparation & presentation of shipowners' claim for presentation to their Hull Underwriters in order to facilitate settlement.
What do the Average Adjusters do?
An Average Adjuster is an independent and impartial person who collects and collates information / documents relevant to the claim and then prepares a statement of claim, generally known as "Average Adjustment Report".
What is the difference between the role of a Surveyor / a Loss Adjuster and an Average Adjuster?
- The Underwriters generally appoint Loss Adjusters & Surveyors whereas Average Adjusters are generally appointed by the Shipowners.
- A Loss Adjuster as well as Surveyor is a generalist dealing with all types of claims i.e. Fire, Motor, Marine, etc. Whereas, an Average Adjuster is a specialist who deals with marine claims only.
- Surveyors and Loss Adjusters generally carry out the physical survey of loss and prepare a survey report stating the cause, nature and extent of damage i.e. they quantify the damage in technical as well as financial terms. However an Average Adjuster does not visit the casualty site but is more concerned with the aspect of liability, accounting and maritime law and practice.
What is the need for Average Adjusters?
Ships operate in a hostile environment where accidents regrettably can and do happen. Incidents often involve interest from several countries, each bringing in its own legal/technical system to bear upon the casualty. The Shipowners or the Underwriters neither have the technical or legal expertise nor are they equipped to deal with complex marine claims. Average Adjusters with their unequalled blend of knowledge of law of insurance and of vessels' operation and maintenance are able to interpret the claim not only in relation to the terms and conditions of the insurance policy, but also with regard to relevant maritime law and practice. Further, the independent and impartial nature of the profession ensures that the Shipowner or the Cargo Owner recover all to which they are entitled to under the terms of the insurance policy; simultaneously, care is taken that Underwriters pay only to the extent of their liability and nothing more.
What are the different types of Adjustments that an Average Adjuster prepares?
All types of claims, whether large or small, simple or complex, on a wide-ranging variety of vessels and crafts are dealt with by an Adjuster. It may be in any of the following forms depending on the type of loss:
- General Average
- Particular Average
- Collision Liability
- Sue & Labour Expenses
- Salvage Charges
- Constructive Total Loss / Total Loss
- Collision recoveries including legal costs
- Claim on Ship Builders All Risk Policy / Repairers Liability
How does one qualify to be an Average Adjuster?
Associations of Average Adjusters both in USA & UK have been for many years conducting examinations. Anyone can appear for this examinations. No special degree is necessary, but a basic knowledge of marine insurance will prove useful. After passing the examination which is quite tough and may take 5 to 6 years one can be qualified as a Full Member of the U.S. Association or a Fellow Member of the U.K. Association. One can qualify as a Full / Fellow Member only by successfully passing this examination.
Is it compulsory for the Shipowners to appoint Average Adjusters?
It is not compulsory for the Shipowners to appoint an Average Adjuster; however, it is an established and recognised practice followed by the Shipowners and their Underwriters.
Is the statement prepared by the Average Adjusters legally binding?
A statement prepared by the Average Adjuster is not legally binding; however, since it is prepared by an independent party, it is readily acceptable to the Insurance Companies. Adjustment reports are rarely challenged in the Court of Law.
Who pays the fees of the Average Adjuster?
Though the Average Adjusters are appointed by the Shipowners, the fees are paid by the Insurance Company and it forms part of the claim. Even though the fees are paid by the Underwriters, the Adjusters maintain impartiality and do not favour either the Shipowner or the Underwriters.